Denton Drilling: A Blog by Adam Briggle

Sunday, September 28, 2014

Here is some quick math on the latest hyperbole from the
industry about the costs of Denton’s fracking ban. This all comes from their
own numbers on the recent smiling school kids mailer.

They claim oil and
gas contributed $1.26 billion to the Permanent
School Fund last fiscal year. There are 304,000 active oil and gas wells in
Texas. Clearly, oil wells will produce more revenue for this fund than natural
gas wells – Denton doesn’t have oil wells. But let’s assume all wells produce
the same returns. That would be $4,144 per well to this fund. That would mean
Denton’s 281 gas wells contribute $1.16 million to the fund.

Now even after the ban, Denton’s gas wells will continue in
production. New wells won’t be fracked and old wells won’t be re-fracked.
Drilling can still occur. It’s hard to say how that will all work out in the
future. But let’s take an extreme scenario and assume that lost revenue from
fracking after the ban will be equivalent to shutting down all of our wells.
Again, that’s extreme and it won’t happen…but let’s give them the benefit of
the doubt to help inflate their numbers.

So, assume we lose that $1.16 million contribution to the
state fund annually. That fundpays out
on its interest, which is about 10%. So, that’s $116,000. Now, that loss would
be spread across the state’s 5 million school children. That amounts to an
annual hit of 2 cents per student. The entire cost to DISD would be $540.

Now, the industry likes to talk in terms of ten year
periods. So, that would be $5,400.

On their latest mailer, they claim the ban will cost DISD
$28.6 million over ten years. That’s 5,296x higher than what even a generous
reckoning seems to show. The mailer directs you to their website, but there is
no mention there of this $28.6 million figure.*actually see below*

Gosh, maybe they really don’t care about our children and
are just using their smiling faces as a smokescreen to hide their total BS?

If oil and gas is such a windfall for our schools, why does
Texas rank
49th in the country on per-student spending? If this boom is such a
big deal, why has state funding DECREASED over the past two years by $1,000
per-student? And did you know that the two leaders of the opposition to the ban
make more from mineral wealth than our entire school district? You can look
that up here.

Could it be that this isn’t really about our schools or our
children at all? Might it be that this is about highly concentrated profits for
the very few and the very powerful?

After the confusion about their giant figure wore off, anger
took its place. How dare they do this?! They are trying to scare us into voting
against the health and safety of our children. They are saying that somehow
toxic emissions and blowout hazards right next to our homes and schools is good
for our kids. On balance, this is a positive thing!? All the pollution and
risks are worth it?!

Denton parents and grandparents are the LAST people who
deserve to get lectured about suffering for the greater good. Every child in
Texas benefits from this school fund, whether or not they have oil and gas
wells in their town – or in their back yards. We’ve got 281 of them. Many
cities don’t have any. If you crammed all of Texas’ gas wells into the 7% of
our land area that is metropolitan, Denton would still have 3x the number of
wells as the average city.

We are doing far more than our fair share for this fund.

But here’s the beauty of it. Once we ban fracking and we
start building home sites rather than frack sites, we’ll generate way more revenue
for our schools. The fact that Texas is ranked 49th despite
contributing oil and gas revenues to schools is a good indication that this is
not a healthy model for school funding. It is far better to have a robust local
economy with a strong tax base, which is precisely what the ban will help us
achieve.

*I finally found the infamous $28.6 million figure buried in Appendix D of page 23 of the bogus Perryman Report, which is linked to their site. This appears to be a sleight of hand. This is their estimated increase in tax receipts for DISD from increased drilling activity. But it is NOT the figure they give for lost tax revenue for DISD from the ban. That figure - which is in bold and underlined in red up front on the executive summary is just $4.6 million. If they really thought the $28.6 figure was the cost of the ban, you can be sure they would have put that up front in bold and red.

Most of their assumed losses from the ban are from property taxes. But their own figures show that every acre of fracked land generates less than 25% of the tax revenues of an acre of residential development. Plus homes appreciate in value over time. Frack sites depreciate.

If you want long-term, solid tax revenues for schools, fracking would be low on your list of choices.

Build home sites, not frack sites. Less pollution, more tax revenues for schools.

Sunday, September 21, 2014

The completely predictable has happened. The
industry is trading on the Chamber of Commerce’s influence and credibility.
They just sent out a huge flyer to Denton voters featuring the Chamber of
Commerce Board’s decision to oppose the ban. Many people think the Chamber
actually sent out that flyer. That’s the way the industry wants it – they want
to dress the predatory wolf of their vicious practices in the sheep’s clothing
that is the Chamber.

The Chamber Board has done an enormous disservice to
local democracy. They let the industry wear the mantle of the Chamber’s
reputation. They did it without consulting the actual members of the Chamber,
let alone providing a mechanism for dissenting voices within their organization.
They did it without conducting their own independent analysis of the issue.
They did it without hosting a forum to air all sides of the issue. They just
echoed the same one-sided analysis used by the industry.

They swallowed the industry’s report without any
critical thought. Like the industry, they talked only about the costs of the
ban. They didn't even think to consider the benefits. If they would have, they’d
find that the industry’s own report proves that an acre of fracking generates ¼ as much tax
revenue as an acre of residential development and only ½ as much economic activity as the
average acre of land in Denton. There was no mention of air pollution or waste of water. They only talked about mineral rights, but not
the rights of those suffering nearby fracking operations. They didn’t mention
the fact that the ban does not prohibit operators from drilling to access minerals
or that the ban is less restrictive than other valid ordinances in Texas.

They only parroted the newspeak of the industry
about responsible drilling and “reasonable regulations.” They didn’t mention
how Denton tried for years to craft reasonable regulations only to discover
that it was all too late – the industry is grandfathered under old laws that
allow them to frack as close as 200 feet from homes on 30% of our land area
forever. Under those conditions, there is no other reasonable regulation than
the ban.

We can debate whether a body that receives nearly a
quarter million in taxpayer dollars should be weighing in on ballot initiatives
at all.

But if they are going to take a political stance,
there can be no question that they are obligated to do so in a way consistent
with the basic values of democracy: participation, transparency, and critical
thinking. We should expect the leaders of our business community to conduct a thorough assessment. We should expect a quasi-public body to be inclusive in processes that lead up to their political positions.

If you can’t tell, I’m angry at the Chamber’s Board.
They have no right to go behind closed doors and with blinkered vision throw
the weight of their organization behind the industry. It’s a betrayal of
democracy and the good faith of the people who trust and respect the Chamber.

If I was a member of the Chamber – even if I opposed
the ban – I’d be furious that the Board thinks they can speak for me without
consulting me. If I was a taxpayer in Denton (wait, I am), I’d be furious that
the Board stamped a special interest with the imprimatur of the Chamber without
even so much as a public forum.

You can’t get much more sneaky and misleading. The
Board owes us an apology. In fact, they need to mail an apology letter to
everyone who got that flyer.

Wednesday, September 17, 2014

Here is this blog in meme form:

In June, the industry released a report
(by the Perryman Group) about the costs of the fracking ban in Denton. I guess
they figured that no one would actually read the report.

But I did. And I found out that the industry’s own numbers prove that the fracking ban will be a net positive for Denton’s economy.

Now, at first I just pointed
out the fact that the report confirms fracking is a miniscule part of our
economy, comprising a puny 0.2% of Denton’s gross product and 0.5% of tax
revenues. And that's taking their own numbers at face value even though they are doubtlessly exaggerated in their black-boxed methodology.

But now we can add to that assessment by putting their
report in the context of Denton’s overall land use and economy as detailed in
the new Denton
Plan 2030.

You see, the industry report only looked at the costs of the
fracking ban. Of course, all decisions have costs. You’ve got to look at the
benefits too and see if they outweigh the costs.

Kevin Roden has already made a
strong qualitative case that the fracking ban will bring a boom
for our economy.

But now I can add a quantitative case. The ban will bring
significant, measurable benefits for our economy.

All I had to do was look at the industry’s own numbers and
ask how much gross product and tax revenue fracking generates on a per acre
basis. Then I looked at the Denton Plan 2030 to see how that compares to
other forms of development.

It turns out that fracking is an embarrassingly UNPRODUCTIVE
use of land. Every time we allocate an acre of land to fracking rather than
other land uses, we forego significant economic benefits.

Fracking generates about $55,000 in gross product per acre.
Not bad. That is, until you compare it to the $114,000 generated by the average
acre of land in Denton (over 10% of which is undeveloped).

Fracking generates about $1,100 in tax revenues per acre. By
comparison, residential development generates about $4,300 in tax revenues per
acre, and that’s assuming today’s median-priced homes. (The figure for commercial is $9,600 per acre.) Plus, homes appreciate
in value over time, meaning more and more tax revenue, whereas frack sites
depreciate over time (eventually leaving a devalued, blighted brown zone). Oh,
and fracking fouls our air, contaminates our water, and devalues neighborhing properties.

It turns out that fracking is one of Denton's least productive land uses. I can’t thank the Perryman Group enough for
showing us how much stronger our economy will be once we ban this economic
under-performer!

Tuesday, September 16, 2014

Tonight, City Council is going to consider giving the Denton
Chamber of Commerce $227,467.
This will provide continuing funds for the Chamber’s Office of Economic
Development. Most of this money will go to pay salaries and benefits.

Now, I don’t doubt that there is much good to be had from
this Office. But as a quasi-public entity, it creates some ethical grey areas.
I won’t be at the Council meeting tonight (I’ll say why in a moment), but I
think it would be good if Council aired some questions about this partnership –
not in an accusatorial way, but rather in the spirit of public education.

A little while ago, the Chamber’s Board (with no notice
given to their full membership) announced their opposition to the proposed
ordinance banning hydraulic fracturing in the city limits.

Here’s my question: Is it right for an organization
supported in significant measure by taxpayer dollars to advocate for or against
ballot initiatives?

We have state laws that
prohibit public employees from spending public funds to support or oppose ballot
initiatives. City Council members can’t even use their public e-mail accounts
to weigh in on ballot initiatives. But here is the Chamber with over a quarter
million public dollars weighing in with a political position.

Now, the people paid for by the contract with the city are
considered employees of the Chamber, which is listed as a private non-profit
corporation. Nonetheless, they are paid for by the taxpayers. Grey area.

Or maybe not so grey...aren't non-profits supposed to stay out of politics? Shouldn't they form a PAC?

The Chamber may not be using city funds to directly take
their political position against the ban (though maybe the Council can ask for
some assurances of that fact). But they certainly are using their significant
clout and cache in our community to leverage their position. And they would not
have as much clout and cache if they didn’t receive large financial
contributions from the city. Grey area.

And it doesn’t clear matters up to say that other entities
might do similar things. As I tell my kids, just cuz she did it doesn’t make it
right for you to do it.

Finally, the reason I won’t be at the Council meeting
tonight, is because I will be at Café Loco (6 p.m. free and open to the
public!) setting the record straight about how the fracking ban will benefit
our economy in significant and measurable ways.

I am not sure if the Chamber should be picking sides on
ballot initiatives. But I do know in this case they picked the wrong side. If
they would have done their own independent critical thinking about the issue,
they’d find what I have found: a ban on fracking will be a major net gain for
Denton’s prosperity and welfare. It also respects everyone’s property rights.
It protects Denton residents from toxic trespass and home devaluation, while
allowing for development of mineral property using less offensive techniques.

Sadly, the Chamber has put its (publically-funded) weight on
the wrong side of this issue. A full page and extremely dishonest ad yesterday
quoted the Chamber, which in turn was quoting an industry report. Now our
Chamber of Commerce has become part of an industry-spun echo chamber.

That’s something the Council should consider tonight.

How about this? If the Chamber is going to take political positions, why not host a public forum first where all sides of the issue can be aired? Why do it behind closed doors with only the Board?

Thursday, September 11, 2014

The industry keeps trying to pretend that fracking is a big economic benefit to Denton. I used their own numbers to show how that just isn't so. In fact, the benefits are so puny that they are easily outweighed by all the costs associated with fracking. I spoke to some of those costs in an earlier post.

We can now get a peek at some more costs as outlined by the City of Denton in the draft of its new comprehensive plan. Not all of the costs identified in the comprehensive plan relate directly to hydraulic fracturing, but then again the industry's report about benefits rolled in so many economic multipliers that it strayed way far afield from direct economic impacts of hydraulic fracturing.

What we see in the comprehensive plan is just how much frack sites are going to be a drag on our future - they are going to increase the costs of Denton's development significantly. And they are going to significantly reduce the revenues that could otherwise be provided from more productive and sustainable land uses.

If you want tot do a real cost-benefit assessment (and not a cartoon, biased industry sham with a foregone conclusion), then here are just a few of the things you'd need to think about (from the comprehensive plan draft, pp. 46-48):

"• Future development costs for
structures, new roadways, and utility extensions near gas wells, oil wells, and
pipelines may incur unforeseen expenses due to the potential need to develop around
Drilling and Production Sites or pipelines, relocate or bore utilities around
existing pipelines, perform environmental testing if the property is identified
as a prior Drilling and Production Site, or clean up and mitigate contaminated,
inactive sites.

• There are a significant number
of gas wells in Denton and its ETJ, mainly west of I-35. Structures cannot be
built over a plugged well and building siting must follow Fire Code
requirements to locate in the vicinity of an active well

• Since vertical
construction cannot occur in a pipeline easement, future development potential
is severely limited near pipelines...

• The operations performed at
Drilling and Production Sites require heavy vehicle traffic to support the
various activities. The increase in vehicle traffic can adversely impact
associated roadways and traffic patterns around the Drilling and Production
Sites. Dirt, dust, and debris associated with drilling and production activities
can produce localized adverse effects which could make new development near
them undesirable and unlikely.

While…setbacks serve to reduce
risks to public safety, they also impact development and compromise land use efficiency.
[This is exacerbated by] the wide scattering of isolated well sites throughout
much of the western portion of Denton…

While regulations were enacted in
2010 to limit gas well development plats to a maximum of five (5) acres, a number of
pre-existing platted production sites exceed one hundred (100) acres and even
include residential and other protected uses within drilling and production
site boundaries. Thus, development of adjacent properties for residential and
other protected uses is restricted by the application of setbacks to these
non-drilling sites, regardless of proximity to well locations."

Thursday, September 4, 2014

The Denton Chamber of Commerce's decision
to oppose the proposed ban on hydraulic fracturing contradicts its vision of
promoting “the general welfare and prosperity” of Denton. I respect the Chamber and admire all the good they do for Denton. But they have made a mistake here and I urge them to reconsider their position.

Had they taken an
objective look at fracking, they would find that it is a drag on our economy
and an obstacle to future development. Fracking poses severe safety and health
risks to the Denton community in order to extract mineral wealth that is
primarily exported to non-local businesses and absentee mineral owners. Only 2%
of the appraised mineral value is owned by Denton
residents. Gas wells rapidly deplete in value – 90% in five
years. Denton will be stuck for the long haul stewarding hundreds of blighted
industrial sites of diminished value.

Shockingly, the Chamber based its decision solely on an
industry-funded report by a group with a known record
of extreme hyperbole when it comes to estimating the economic impacts of the
oil and gas industry. Yet even if we accept the industry’s numbers, they actually
confirm the economic case against fracking. They show that it is a
miniscule part of our economy: it accounts for 0.2% of our gross revenue, 0.25%
of our labor force, and 0.5% of our tax revenues. Fracking accounts for 0.17%
of DISD’s budget, while dozens of gas wells right next to our schools emit
thousands of pounds of toxic chemicals.

How is any of this good for our welfare and prosperity?

City Council member Kevin Roden rightly notes that a ban on fracking
will have “no perceivable impact on our local economy.” Indeed, the ban will
bring about an economic boom. It will add value to properties that would
otherwise be devalued
by nearby fracking operations. It will bring the economic benefits of cleaner
air and water and safer neighborhoods. Most importantly, the ban will make
Denton more attractive to the skilled workforce we need to support
higher-paying jobs and drive our economy forward. A city that allows a
poisonous industry less than 200 feet from homes is not an attractive place to
move. Without the ban, the workforce we need will find jobs, and spend their
money, elsewhere.

It’s disappointing that the Chamber failed to consider the
full picture. Like the industry they only thought about the costs of a ban and
didn’t see how that flea is dwarfed by the elephant of economic benefits that a
ban will bring.

The Chamber advocates “reasonable regulations,” but this too
is just a restatement of an industry talking-point. The fact is that the City
of Denton worked for three years attempting to craft regulations that would
both permit fracking and protect the health, safety, and welfare of her
citizens. Yet at every turn, the industry failed to compromise. They insist on
fracking as many wells as they want closer than 200 feet from homes and schools
on the 30% of our city’s land area already permitted for fracking. We actually
have a reasonable ordinance on the books. The problem is that it doesn’t apply
to anything, because fracking is vested under older laws. We were just closing
the barn doors after the cows got out. Further calls for working on regulations
can only shut the door tighter but not corral the herd.

Finally, the Chamber incorrectly claims that state law “guarantees”
that property owners can access their minerals. Like most rights, mineral
ownership is qualified, not absolute. Besides, the proposed ban is actually
less restrictive than other valid ordinances in Texas, because it is only a ban
on hydraulic fracturing, not drilling. An independent law firm has concluded
that the proposed ban is legal.

The ban is the only reasonable option available to us.
Without it, we will see the wholesale industrialization of Denton’s
neighborhoods by an activity that pumps all the benefits out of town and dumps
all the costs on us. On November 4th, we need to pass the ban on
fracking in the name of promoting Denton’s welfare and prosperity.

Sunday, August 17, 2014

At the City Council public hearing on July 15th,
the industry representatives chose the following rhetorical strategy: “We
recognize that fracking is a problem in Denton. But we don’t need to ban it. We
promise to work with you to draft better regulations.” They are now
saying the same thing in their national op-eds about the Denton fracking
ban.

City Council members reminded them that we have worked for
years on local policy to no avail – there is still fracking less than 200 feet
from homes. Then City Council asked the industry representatives what ideas
they had for improving our bad situation. They were silent. They just promised
to help us come up with…something.

Now it is over a month later, and I’ve just heard from
several city leaders that no one from the industry has lifted a finger to
follow through on their promise. I know…it came as a shock to me too. You mean
they were only blowing smoke?! They don’t care about us?! But they said…wow.

Actually, they are not just passively neglecting their
promise; they are actively undermining it. The city has a moratorium in effect
on new drilling permits while they revise the gas well ordinance. But that puts
a crimp in the plans of Vantage Energy to get frackin’ now. So, rather than
work with us (as they promised to
do), they are going to work around us:
on August 25th, Vantage is going to the Zoning Board of Adjustment
to get an exemption from the moratorium.

So, they say they recognize the problem; they respect us and
want to help us to revise our regulations. But when the rubber hits the road
(and actual money is at stake), they have no patience for our processes and no
respect for our rules.

That’s the story of fracking in Denton. It’s an old story. I
don’t know who they think they are fooling anymore.